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Wednesday, 27 May 1942

Senator KEANE (Victoria) (Minister for Trade and Customs) .- I move -

That the bill be now read a second time.

This bill implements an undertaking given by the Government when the legislation which is now the prin- cipal act was before this chamber last year that two amendments proposed to be moved by Senator Spicer would, if withdrawn, receive the consideration of the special committee representing all parties which considered the provisions of the principal act. The Government gave careful consideration to the proposed amendments and decided that it had no objection to them. Accordingly it inserted two provisions in this bill for the purpose of giving expression to the amendments. The special committee, of which Senator Spicer is a member, has accepted the form of the amendments inserted in the. bill. Those amendments were to excise certain words referring to a judgment or order of a court, from the definition of "disposition of property" as contained in the principal act, and to insert a provision in section 12 of the principal act - which specifies when a gift is deemed to be made - for the purpose of ensuring that gifts, completed before . the commencement of the act, should not be treated as having been made after the commencement of the act. The former amendment will be found in clause 3, and the latter in clause 5 of the bill. The opportunity provided by the necessity to introduce these amendments has been taken for the purpose of givingmore definite expression to the intention behind several other provisions of the act. The main matters dealt with in this connexion are the exemptions granted by section 14 of the principal act, and the question of the valuation of share3 dealt with in paragraph d of section IS of that act. It has been found by actual experience that some gifts which it was intended that section 14 should exempt would not have been exempt under that section in its present form. Consequently, several small amendments have been made in several of the paragraphs of that section. All of them extend the operation of the exemption provisions, and in no case will there be any limitation imposed by the amendments in this bill.

The valuation of the shares of companies which are not listed on a stock exchange is a difficult problem, and it was found that paragraph d of section 18 of the act, which gave the Commissioner power to value those shares on what is commonly known as the assets basis, were not entirely satisfactory. In many cases where the assets of a company are not earning good returns it would be unjust to the donor to adopt the assets basis, whilst in other cases the assets basis would be unfair to the revenue. The New South Wales Stamp Duties Act contains a provision which, I am advised, has been found in actual practice to be adequate for the purpose of ascertaining a proper value for such shares. It is equitable to both the shareholder and the revenue. It was decided, therefore, to adopt a similar provision for the purposes of valuing shares in private companies comprised in gifts subject to duty under the principal act. In the New South Wales act, the provision is mandatory in that it requires that the value shall be determined on the basis set out therein. The committee which considered the provisions of this bill felt that it might be unf air, in the case of small shareholders in such companies, to make the section mandatory, and it has accordingly been decided that the provision shall not be mandatory but shall be used only where the facts of the case justify its use. Wherever the Commissioner uses the provision, his decision to do so is subject to review by the valuation board or the courts upon appeal thereto by the donor. I commend the bill to the Senate.

Debate (on motion by Senator A. J. McLachlan) adjourned.

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